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Tuesday, January 26, 2010

MK Land shares dip on news of internal dispute

PETALING JAYA: Shares in MK Land Holdings Bhd continued to fall yesterday, shedding another 0.5 sen to 38.5 sen on volume of 1.39 million shares, on news that three of its chief operating officers (COOs) would be leaving the company because of a management dispute.

Since hitting a six-month high of 45.5 sen on Jan 6, the stock has been facing selling pressure due to rumours of a management fallout.

The three COOs are R. Balasundram, Fatimah Wahab and Yusof Abu Othman, who together with Lau Shu Chuan, were appointed COOs in November 2008.

Sources close to MK Land said Fatimah tendered her resignation yesterday via email.

Fatimah is said to be unhappy as MK Land executive chairman Tan Sri Mustapha Kamal Abu Bakar had earlier promised to make her chief of MK Land.

However, when he recently appointed his eldest daughter executive director, Fatimah was said to be disheartened.

One source said that Balasundram was no longer going to office, while Yusuf would leave at the end of the month. MK Land officials declined comment on the issue.

On Saturday, it was reported that plans to rejuvenate MK Land Holdings Bhd had hit a snag as three of its four COOs, who were roped in to turn around the property development company, would be leaving.

To recap, Mustapha had returned to helm MK Land in June 2008, after earlier stepping down to focus on his private companies.

MK Land had posted losses in 2007 due to additional costs incurred to complete projects. He had great hopes of embarking on a turnaround plan in 2008 to be implemented in three phases.

Phase 1 involved strengthening the senior management team with the introduction of new COOs, adopting focus products to improve sales and the divestment of vacant plots of land to increase cash levels in the group.

This was when the four COOs were appointed. Since then, MK Land has been able to make profit and boost sales. It posted a net profit of RM18.3mil in 2008 versus a net loss of RM61mil in 2007.

For the first quarter ended Sept 30, 2009, revenue was up over 5% to RM80.81mil but net profit fell 75.5%to RM1.2mil.

Under the leadership of the four COOs, it was reported that MK Land was recording average sales of RM30mil per month, three times more than prior to their appointments.

The purported resignations of the COOs may put a stop to the second and third phases of MK Land’s turnaround plan.

Phase 2 is aimed at higher profitability with plans to move into a more high-end residential market in Damansara Perdana together with the development of purpose-built office buildings in Cyberjaya and Damansara Damai.

Phase 3 is where MK Land plans for longer term profitability and growth by exporting its expertise in quality affordable housing to other countries.

MK Land is the 16th biggest property developer in Malaysia with market a capitalisation of RM464mil.

By The Star

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